German automakers, long dominant in the high-performance car market in China, are facing a new challenge. Chinese rivals are redefining the premium car experience, focusing on electric vehicles that are smart and affordable. This shift is significantly impacting the sales of established German brands.
Many new Chinese vehicles, such as the Xiaomi SU7, draw inspiration from their German counterparts. The SU7, for example, shares similarities with the Porsche Taycan. The SU7 matches the Taycan in performance, power, and braking capabilities but adds integrated artificial intelligence features. These features can assist with parking and even greet drivers with personalized music. The most compelling aspect is its significantly lower price point, selling for approximately half the cost of a Taycan.
The German automakers, who have controlled a major share of China’s premium car market for decades, are seeing their sales figures decline. Xiaomi, a leading Chinese smartphone manufacturer, sold over 100,000 SU7 models in the past year.
Porsche has been particularly affected. The company reported a 28 percent drop in deliveries in China during 2024. Despite growth in other regions globally, the decline in China was enough to reduce Porsche’s global deliveries for the year by 3 percent.
For years, German automakers relied on the Chinese market to offset weaker demand elsewhere. This reliance seems to have delayed their recognition of fundamental changes in the Chinese automotive market. The crucial shift involved the adoption of electric vehicles equipped with advanced software and artificial intelligence.
